Canada is preparing to impose retaliatory measures against the United States if negotiations to remove tariffs on steel and aluminum imposed by the Trump administration are unsuccessful. Here's an update on the situation ¹:
Key Developments
- Retaliatory Tariffs: Canada has imposed $29.8 billion worth of tariffs on American goods in response to US tariffs on Canadian steel and aluminum.
- Escalating Trade Tensions: The US has imposed 25% tariffs on Canadian exports and 10% on energy, prompting Canada to plan retaliatory measures worth C$155 billion on American goods.
- Phased Retaliation: Canada's response will be implemented in two phases: an initial $30 billion worth of tariffs effective immediately, followed by additional tariffs on $125 billion of American products within 21 days.
Canada's Strategy
- Protecting Interests: Canada aims to protect its consumers, penalize US industries, and intensify opposition to Trump's proposed tariffs domestically.
- Diversifying Trade: Canada is exploring domestic energy projects and new trade corridors to reduce dependence on the US.
- Legal Action: Canada has initiated legal proceedings through international trade organizations, citing US tariffs as "illegal and unjustified".
Impact
- Economic Fallout: The tariffs have resulted in higher costs for US industries heavily reliant on Canadian imports.
- Market Volatility: The financial impact of the tariffs has been swift, with bond yields dropping and mortgage rates declining ² ³ ⁴.
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